Biomass Conversion On the cusp of commercialization Sebastian Søderberg, Vice President Biomass Conversion, Novozymes Claus Crone Fuglsang, Vice President R&D, Novozymes

João Alberto F. de Abreu, Executive Director Agroindustrial, Raízen

This presentation and its related comments contain forward-looking statements, including statements about future events,

future financial performance, plans, strategies and expectations. Forward-looking statements are associated with words

such as, but not limited to, "believe," "anticipate," "expect," "estimate," "intend," "plan," "project," "could," "may," "might"

and other words of similar meaning.

Forward-looking statements are by their very nature associated with risks and uncertainties that may cause actual results

to differ materially from expectations, both positively and negatively. The risks and uncertainties may, among other things,

include unexpected developments in i) the ability to develop and market new products; ii) the demand for Novozymes’

products, market-driven price decreases, industry consolidation, and launches of competing products or disruptive

technologies in Novozymes’ core areas; iii) the ability to protect and enforce the company’s intellectual property rights; iv)

significant litigation or breaches of contract; v) the materialization of the company’s growth platforms, notably the

opportunity for marketing biomass conversion technologies or the development of microbial solutions for broad-acre crops;

vi) the political conditions, such as acceptance of enzymes produced by genetically modified organisms; vii) the global

economic and capital market conditions, including, but not limited to, currency exchange rates (USD/DKK and EUR/DKK in

particular, but not exclusively), interest rates and inflation; viii) significant price decreases on input and materials that

compete with Novozymes’ biological solutions. The company undertakes no obligation to update any forward-looking

statements as a result of future developments or new information.

Forward-Looking Statements

2

Session outline

• Progress and challenges last 18 months

• Reasons to believe in biomass conversion

• Innovation priorities

• Raízen: Views from leading brazilian sugar cane crusher and biomass conversion pioneer

3

15 years of continuous development and one of our largest R&D investments

Business Development – BioAgriculture – Biomass Conversion – Animal Health & Nutrition

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2001

Launch of Cellic®

CTec for the first

cellulosic ethanol

demonstration plants

The first commercial

cellulosic ethanol

plant: Crescentino –

using Novozymes’

Cellic® technology

Biomass conversion

pilot plants worldwide

testing Novozymes

enzymes

One of largest R&D

investments in

Novozymes’ history

was initiated

Five of seven large

scale biomass

conversion ethanol

plants globally use

Cellic® technology

Exclusive partnership

with Brazil’s largest

sugar-based ethanol

producer

2005 2009 2012 2013 2015

Foundation Pilot stage Demo stage Initial commercial stage Optimization stage

Biomass conversion industry today Biomass conversion industry in fall 2013

Progress towards commercialization since Capital Markets Day 2013

• Beta Renewables’ Crescentino plant is the world’s first and only commercially operating cellulosic ethanol plant

• Three plants under construction in the US and two in LA

• Large number of publicly announced biomass conversion projects

• Expectation of a relatively fast industry commercialization

• Novozymes’ Cellic® CTec3 is the leading enzyme technology (one size fits all enzyme product)

Business Development – BioAgriculture – Biomass Conversion – Animal Health & Nutrition

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• Six commercial plants are in operation with Novozymes supplying five of them. DuPont to be #7

• All process steps undergoing optimizations

• 20+ solid biomass conversion projects are under development globally (not all publicly announced)

• Recognition that industry commercialization will take longer

• Novozymes is committed to pursue further process optimizations beyond enzymes. Our customized next generation Cellic® enzyme solutions are being launched

• Novozymes heavily engaged in project development with “boots on the ground” globally

Headwinds and longer timelines than anticipated, but several reasons lead us to believe that these will be overcome

• New industries take time – it’s a marathon, not a sprint

• Many industries deliver lower Capex over time

• Novozymes as a full biotech solutions provider to bolster biomass conversion process optimization

• Healthy project pipeline continues to mature

Business Development – BioAgriculture – Biomass Conversion – Animal Health & Nutrition

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Prolonged industry ramp-up

• Up-scaling of commercial plants takes longer than expected. From serving 15 plants by 2017 to an assumption of ~15 by 2020

• New projects struggle to find financing, as everyone is in waiting mode to get confirmation of the economics

• Some projects have been cancelled or on hold

• Expectation that internal combustion engines / liquid fuels will play a substantial role in the future

• National blending mandates in the EU (Italy announced, more in the making)

• Brazil ethanol blending mandate increase to E27

Macro and regulatory uncertainty

• Lower oil price casts uncertainty and makes for a tougher environment for biofuels – particularly in the US and Asia

• US ethanol demand stuck in limbo due to the blend wall and unclear regulatory framework

Comparable disruptive technologies have taken 15+ years to take off; enabling an industry is a “marathon” with multiple hurdles to be overcome

Business Development – BioAgriculture – Biomass Conversion – Animal Health & Nutrition

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Source: US Renewable Fuels Association (annual capacities) after 1999 and SRI (from 1990); Industry reports; McKinsey analysis

Comparable disruptive technologies have taken ~15 years to reach commercial scale

Enabling an industry is a “marathon” journey – resilience is key

0

5,000

10,000

15,000

Installed corn ethanol capacity (U.S.), 1990–2014

Million gallons/year

Gas production from shale gas

Billion cubic feet per day

0

20,000

40,000

60,000

80,000

100,000

120,000

+57%

+31%

2012 11 10 09 08 07 06 05 04 03 02 01 2000

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

+23%

+27%

2013 12 11 10 09 08 07 06 05 04 03 02 01 2000

+4%

+29%

+9%

2014 12 10 08 06 04 02 2000 98 96 94 92 1990

Global solar power cumulative installed PV capacity 2000–2012

MW

Global cumulative installed wind capacity 1996–2013

MW

0

5

10

15

20

25

30

+38%

+25%

2013 12 11 10 09 08 07 06 05 04 03 02 01 2000

Wind

Solar Corn ethanol

Shale gas

Significant learnings in first biomass conversion plants and the example of the US 1G industry suggest that Capex will reduce for the next wave of biomass conversion plants

Business Development – BioAgriculture – Biomass Conversion – Animal Health & Nutrition

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0

100

200

300

400

500

50 100 150 200 250 300 350 400 450

Capex development over time

Example: 1st generation corn ethanol plants in the U.S.

Source: Data: LeBlanc and Prato, 1982, Gavett et al.1986, Whims, 2002, Understanding the reductions In US

corn ethanol production costs

Cap

ex, U

SD

(2005)

/ m

3

Plant production capacity 1,000 m3 / year

1981

1985

2001

Major reasons for reduced Capex:

• Optimized plant and process design including less over-engineering

• Bolt-on solutions use existing infrastructure and utilities

• Development of standard modules

In spite of existing challenges, we see a solid project pipeline that continues to mature across regions

While several biomass conversion ethanol plants are already operating, more than 20 solid biomass conversion

projects are under development globally (not all publicly announced)

Different business models:

• Co-marketing with Beta

Renewables

• Project development

• Large strategic partners e.g.

Raízen

Business Development – BioAgriculture – Biomass Conversion – Animal Health & Nutrition

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*Non-exhaustive

Project Alpha

Project Italy

Teck Guan

Punjab

Publicly announced, commercial biomass conversion projects under development by region (Q1/2015)*

Major improvements in Novozymes’ enzyme technology have been a key enabler of biomass conversion commercialization and will drive further plant optimization

Customized Cellic® enzyme

technology: Further improvement is

achieved through customization of

enzymes to match specific process

and feedstock 0

20

40

60

80

100

2015 2018 2012 2008 2010 2009 2007

Cellic®

CTec

Cellic®

CTec2

Cellic®

CTec3

Years

Customized

Cellic® 1.0

Enzyme use costs develop-ment (indexed)

Sweet-spot optimized enzyme dosing

Enzymes as a valuable tool:

Sweet-spot optimized enzyme dosing

ensures the lowest unit cost of ethanol

cost. For example, improved enzyme

performance has been shown to reduce

the use of acid in pretreatment

Business Development – BioAgriculture – Biomass Conversion – Animal Health & Nutrition

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Pretreatment

severity

Enzyme

dosing

Total solids

loading

Hydrolysis

time

Biomass to sugar

conversion

Sweet spot

optimized to get

the lowest unit

cost of ethanol

Novozymes biotech solutions continue to bolster biomass conversion process optimization and its competitiveness

• Novozymes launches new family of customized Cellic® enzymes tailored to reduce enzyme cost and

improve production performance

• Ongoing optimization of all process steps will further reduce production

costs

Business Development – BioAgriculture – Biomass Conversion – Animal Health & Nutrition

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Cellic® CTec3 Customized Cellic® solutions Customized Cellic® solutions+ further process optimizations e.g.

yeast

Cellu

losic

eth

an

ol p

rod

ucti

on

co

sts

New customized Cellic® solutions and further process optimizations continue to

reduce biomass conversion costs

Note: Based on NREL acid pretreatment process

Pretreatment Hydrolysis Fermentation

Customized Cellic® solutions + further process

optimizations e.g. yeast

Customer-centric Novozymes Cellic® enzyme development – tailored to the individual process and feedstock • Diverging processes with different

feedstocks are being established at industrial scale

• For every combination of process and feedstock, there will be an optimal enzyme system

• Every enzyme system benefits from optimization work

Business Development – BioAgriculture – Biomass Conversion – Animal Health & Nutrition

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Biomass Pretreatment Biomass after pretreatment

Cellulose Hemicellulose Lignin

0%

20%

40%

60%

80%

100%

0% 20% 40% 60% 80% 100%

0% 20% 40% 60% 80% 100%

0% 20% 40% 60% 80% 100%

0% 20% 40% 60% 80% 100%

Steam

Acid

Alkali

Org. solvents

Tailored Cellic®

solutions

Energy crops

Wheat straw

Bagasse

Corn stover

Customized Cellic® enzyme solutions; process, feedstock, temperature and pH

% c

on

ve

rsio

n

Enzyme-relative dose

Key benefits vs. Cellic® CTec3

• Yield boost – Improved hydrolysis performance on xylan-rich substrates

• Robust activity – Broader pH and temperature profiles provide robust activity

• Contamination control – Higher hydrolysis temperature and lower pH inhibit contamination

• Lower OPEX – Reduced base consumption and waste treatment costs

What’s next?

• Adapt customization to evolving partner processes

• Continue optimization efforts together with partners – to drive out cost not only of enzymes but also of process and potential Capex

Business Development – BioAgriculture – Biomass Conversion – Animal Health & Nutrition

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Cellic® CTec3

Customized

Cellic®

E2G Program João Alberto F. de Abreu

Agenda

Introduction to Raízen

Raízen's strategy

How 2G fits into this

Current status on Raízen's 2G efforts

Learnings from plant #1 (in broad terms)

Obstacles to overcome for the industry/Raízen

Opportunities and plans for the future

Upstream

Lubrificantes

Downstream

Cosan Lubrificantes e especialidades

Raízen

Business dimensions World’s largest sugar producer and

Brazil’s largest sugarcane ethanol producer

915,000 ha of cultivated area

96% mechanized harvesting

2 bi liters of ethanol

4 m tons of sugar

941 MW of installed capacity

Fuel distribution A highly efficient and reliable network

5245 Retail stations

910 Convenience stores

60 Distribution depots

58 Airports bases

23,6 Billion m³

Raízen – general numbers in 2013/14

Brazil 1º 640

India 2º 240

China 4º 100

Thailand 3º 110 Pakistan 7º 50

6º Mexico 58

Australia 8º 32

19

World cane crushing (mln t)

5º 61,4

* Source: LMC.

Ethanol, sugar and bioenergy

Strategic drivers

Business drivers

Enablers

Cost reduction

Productivity

Portfólio management

HSSE

People

ROACE

X%

Crushing

65,4MM TC

Aspiration: Lower cost of production per sugarcane tones

Biomass

Ethanol, sugar and bioenergy Production

24 Mills

São Francisco, Rafard, Bom Retiro, Santa Helena, Costa Pinto

Barra, Dois Córregos, Diamante

Bonfim, Tamoio, Serra, Zanin

Paralcool, Tarumã, Maracaí, Ipaussu

Gasa, Univalem, Destivale, Mundial, Benálcool, Junqueira

Jataí

Caarapó

1

2

3

4

5

6

7

Votuporanga

Itapeva

Registro

Sorocaba

Gal. Salgado

Orlândia Franca

S. J. da Boa Vista

Mogi Mirim

Campinas Bragança Paulista

São Paulo

Mogi das Cruzes

Pindamonhangaba

Guaratinguetá

Ilha de São Sebastião (Ilha Bela)

Fernandópolis

Santos

Jales

Dracena

Pres. Venceslau Pres. Prudente

Tupã

Marília

Baurú

Avaré

Botucatu

S. J. do Rio Preto

Ribeirão Preto

Barretos

Andradina

Araçatuba

Catanduva

Jaboticabal

Lins

Itapetininga

Assis

Ourinhos

Piracicaba

Limeira

Araraquara

Jaú

Junq

CA

JAT

Gasa

Mund

Univ

Dest Ben

Ipau

Tar

Mar

Par

49 Km

Diam DC

Barra

Bonf

Serra Zanin

Tam

23 K

m

UBR

Raf IASF

USH

CoPi

11,1 Mtc

11,3 Mtc

12,0 Mtc

12,1 Mtc

Greenfield in MS

2,3 Mtc

10,9 Mtc

2,9 Mtc

Greenfield in GO

4,1 Mtc

Santos Port

Tops & leaves can be the main feedstock for 2G if the industry overcomes logistics challenges

Mechanization process has been increasing

significantly and has reached 65% in

industry

Not burning means extra 45M ton of

biomass available in the industry.

Two process must be selected :

Bring biomass together with the

sugarcane

Bales collection system

Potential of biomass Ethanol production per hectare

85 tons 23,8 tons

14,1 tons

CANE STALK MILL

JUICE

BAGASSE

SUGAR

ETHANOL

DRY LEAVES

GREEN LEAVES

TOPS

BIOMASS

Max. 7 a 8 m3

Extra 2 m3

ETHANOL

Integration opportunities

Plug & play 2G with a 1G plant

Opportunities 120 MM Liters

Steam/Power Supply

1. Retrofit of an existing boiler instead of installing a new boiler.

2. Lignin burning supplies steam and power required by 2G process.

Biomass Handling 1. Synergies with existing assets;

2. Existing know-how.

C6 Fermentation 1. Existing know-how.

Distillation 1. Synergies with existing assets;

2. Existing know-how.

Water / Vinasse Utilities 1. Synergies with 1G water balance (final molasses dilution);

2. Retrofit of existing vinasse disposal system;

3. Existing know-how about vinasse disposal.

4. Operational synergies between 2G and 1G process (utilities, lignin

handling, offices, warehouse, maintenance, etc.)

Sugarcane segment scenario in Brazil Enormous changes since 2009

Number of new production units in the Centre-South region

Number of closed mills

More than 50 kMT of crushing capacity lost

Brazilian matrix of fuel Projections 2020-2025

2015 2020 2025

Sugarcane (million tons) 641 600 650

Sugar (million tons) 35,6 40,5 46,3

Exportation assumption 24,4 28,8 34,0

Ethanol (billion liters)

Anhydrous (27%) 11,9 16,5 20,0

Hydrous 15,3 3,5 0,0

Exportation 1,0 1,2 3,3

Others 1,1 1,2 1,3

Available ATR (million tons)

Supply 87,2 82,8 91,0

Demand 87,2 82,8 91,6

Volume gap 0,59

Sugar (million tons) 0,567

EtoH anhydrous (billion liters) 0,340

Fuels (billion liters)

Current gasoline (EPE) 30,6 31,4

Gasoline demand 44,7 54,1

Volume gap 14,2 22,7

Even considering no hydrous ethanol supply,

sugarcane volume is slightly lower than

market requirements

Conservative importation volume (low fuel

consumption growth and decreasing Brazilian

sugar global market share)

Capacity: 42.200 m3/year

Capex: ~230 MM R$

Commissioning:

Out/2014 – C6 Fermentation;

Out/2015 – C5 Fermentation.

Project E2G COPI (Costa Pinto)

Located in

Costa Pinto Mill

Piracicaba, SP

E2G plant Project details

Construction area: 10.000m² + 30.000m² for biomass storage*. * Biomass storage area considers existing one.

Budget: R$ ~230MM.

Contractors: average 200 with a peak of 500.

800.000 working hours with no lost time incident

Timing : 14 months.

Equipments: 98% produced in Brazil.

2014 operation Main achievements

All process units in E2G plant tested; Biomass handling and storaging as expected; Perfect integration between E2G plant and existing mill; Successfull technology scale up from demo to commercial scale; Enzyme logistics validated; Process Control implemented and tested.

Movie

2014 operation Action plan based on learnings

Evaluation of process and equipment performance; Evaluation of main operation issues; erosion Process optimization in order to reach maximum capacity; Implement improvements based on lessons learned; Commissioning of dedicated boiler for E2G plant.

Challenges Fermentation

Develop GMO yeast to produce ethanol from C5 (xylose); Choosing best fermentation design (once-through vs recycle); Develop process/equipment for yeast propagation on-site; Operation according to GMO regulation (CTNBio); Fermentation engineering and construction.

Second

Gen.

Ethanol

-Biomass Trial;

- Technology Validation;

- Project Starts.

- COPI Operation;

- Technological Platform Advances;

- Progress of Innovation Program;

- Begin 2nd Plant Design

- 8 integrated plants;

- Technology Licensing;

- Technology to maximize biomass economics;

- Integration with Chemical plants.

2012

Demonstration

2014

COPI

1 billion liters

technology licensing

E2G roadmap Plan

Current land use in Brazil Sugarcane for ethanol occupies less than 1% of the Brazilian land mass

851.48 Millions of Hectares

Total Area

329.94

Arable Area

158.75

Pasture

51.7

Agriculture

8.14

Sugarcane

495.61

Protected & Native

58% 38%

25.92

Other

3%

111.34

Available

100%

2.4%

33%

48% 16%

35

Production map Sugarcane in Brazil

Bonsucro:

Non-profit organization with 176 members of various

countries and sectors: agricultural producers, mills,

consumers, NGOs, traders

Multi-stakeholder process to measure, through metric

indicators, the environmental, social and economic

performance of sugarcane-based activities

Chosen by the EU as one of seven authorized schemes to

allow for the export of sugarcane products to Europe

Bonsucro certification

Only international certification for sugar and ethanol made form sugarcane

Raízen:

1st certified mill in the world

10 mills already certified: Maracaí, Jataí, Costa Pinto, Bom

Retiro, Bonfim, Univalem, Gasa, Dois Córregos, Junqueira

and Serra.

32,1% of total sugarcane crushed by the company

712,000 m³ of ethanol

Member of Bonsucro’s executive board

Commitment to certify all mills

CO2 emissions

2G improves the carbon footprint of Raízen

Gasoline Ethanol 1G Ethanol 2G

Conclusion

• Biomass conversion remains a transformative opportunity

• Getting biomass conversion off the ground has taken longer time than anticipated

• Steady improvements and significant progress made over last 2 years

• Ramp-up process key to biotechnology development and industry commercialization

Business Development – BioAgriculture – Biomass Conversion – Animal Health & Nutrition

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